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Simple English definitions for legal terms
clearings
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A quick definition of clearings:
Clearings: When you write a check or use your debit card, the money goes from your bank to the other person's bank. Clearings are the process of making sure the money gets to the right place. Banks use a clearinghouse to exchange checks and settle their balances. It's like a big meeting place for banks to make sure everyone gets paid the right amount. Clearings can also refer to a place where people exchange information or a stock-and-commodity exchange where brokers do their daily transactions.
A more thorough explanation:
Definition: Clearings refer to checks or other items that are drawn on a local bank and presented for payment through a clearing-house or directly to the drawee bank.
For example, if you write a check to pay for something, the person or business you wrote the check to will deposit it into their bank account. The bank will then send the check to your bank for payment. This process of exchanging checks and settling balances between banks is called clearing.
Clearinghouse is a place where banks exchange checks and drafts and settle their daily balances. It can also refer to a stock-and-commodity exchange where brokers' daily transactions are cleared. Additionally, it can be any place for the exchange of specialized information.
For instance, the New York Stock Exchange is a clearinghouse for stock transactions. It facilitates the exchange of stocks between buyers and sellers and ensures that the transactions are settled correctly. Another example is the National Student Clearinghouse, which is a nonprofit organization that provides educational verification and enrollment services to colleges and universities.